News Corp., NBC launch beta of Hulu video venture

But will it stand up to iTunes and YouTube?

News Corp. and NBC Universal debuted their joint-venture online video service with a private beta, adding a new rival to Apple's iTunes and Google's YouTube services.

Hulu joins Joost's video offerings in this increasingly hot and crowded space. While only opening on a limited basis to select users, Hulu is the first major initiative by content owners rather than technology companies who must rely on licensing agreements with television, film, and music providers for their content.

Along with Hulu's own site, the company said its videos would be available through partners such as AOL, MSN, and MySpace, although links for Hulu on these sites were not apparent at the time of writing.

The company also said it had closed a US$100 million round of financing from Rhode Island-based private equity firm Providence Equity Partners.

Hulu's beta and service--the launch date for which has yet to be announced--include a few full-length films, and clips and full episodes from shows such as "The Simpsons," "Prison Break," and "House." Hulu will offer video content on a free, advertising-driven basis.

"People have spent the last six months criticizing it before seeing it, and the fact they delivered it two months late allowed everyone to feel smug in their criticism. But now that it's here, they'll have to eat their words," said James McQuivey, a Forrester Research analyst. "It's not what they promised: it's better."

McQuivey, who has access to the site as part of the beta program, said Hulu is exceeding expectations in several fronts, including the amount of content it features and its network of distribution partners.

He dismissed suggestions that initiatives like Hulu from the rightful owners of TV shows and movies will knock the wind out of Google's YouTube.

The way McQuivey sees things, YouTube's main appeal is in the social interactions of its members, primarily via the uploading and sharing of amateur, "user-generated" video.

"YouTube is more about a social experience than a video experience," he said.

Hulu and similar efforts from organizations like ABC do close the door on the possibility that YouTube would be the Web's TV channel, this is of little concern to YouTube because that was never its goal, he said.

Industry analyst Greg Sterling, of Sterling Market Intelligence, concurs that YouTube and Hulu can coexist by providing a different experience to people.

However, Sterling believes that YouTube shouldn't give up on trying to establish partnerships for professional video material, because a portion of its users come to the site to watch TV and movie clips. "It would be a mistake for YouTube to shun professional content altogether," Sterling said.

On a broader scale, initiatives like Hulu could seriously change how TV shows are distributed, by giving viewers much more control about what to watch and when, Sterling said. This presents potentially a big challenge to cable TV networks, which now have to contend with an Internet channel that lets viewers bypass them, he said.

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